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Wall Won’t Resign

November 14, 1989

WASHINGTON (AP) _ The nation’s top thrift regulator said Monday he has no intention of resigning despite President Bush’s assertion that he is ″not closing the door″ on replacing him.

″The president has indicated that he, too, wants to hear the other side of the story,″ M. Danny Wall, head of the Treasury Department’s Office of Thrift Supervison, told reporters. ″The other side needs to be heard from in a timely way.″

Wall has been the target of hearings by the House Banking Committee into why he waited two years to seize Lincoln Savings and Loan Association after government S&L examiners concluded that the Irvine, Calif., thrift was being operated unsoundly.

But while the panel’s chairman, Rep. Henry B. Gonzalez, D-Texas, has directed his fire against Wall, the shrapnel has hit five senators who intervened on Lincoln’s behalf with Wall’s predecessor in early 1987 after receiving a total of $1.3 million in political gifts raised by Lincoln’s owner.

Wall said Monday that two of those senators also had contacted him about Lincoln after he took over as head of the Federal Home Loan Bank Board, the predecessor of the Treasury Department agency, in July 1987.

All five senators - Dennis DeConcini, D-Ariz.; John McCain, R-Ariz.; Alan Cranston, D-Calif.; Donald Riegle Jr., D-Mich., and John Glenn, D-Ohio - are now the focus of inquires by the Senate Ethics Committee and the FBI into their ties with Phoenix millionaire Charles H. Keating Jr., chairman of Lincoln’s parent company.

Government sources, speaking on the condition of anonymity, said Monday the FBI has interviewed Edwin J. Gray, who was Wall’s predecessor as the bank’s board chairman until July 1987, and Gray’s assistant, Shannon Fairbanks, about an April 2, 1987 meeting with all of the senators but Riegle.

Both testified at a hearing last week that DeConcini - who received $48,000 in campaign gifts from Keating, a Phoenix millionaire, and his associates - asked him at the meeting to withdraw a regulation that would have curtailed Lincoln’s risky investments.

DeConcini has denied making the request and the three other senators present either denied hearing it or said they cannot recall it being made.

Wall said Monday that Riegle, chairman of the Senate Banking Committee, and Gonzalez asked him in a joint letter shortly after President Bush signed a $157 million S&L bailout bill in August to keep a record of congressional inquries about specific enforcement actions.

A system for doing that has not been completed yet, Wall said.

Wall said he has been questioned by the FBI in criminal investigations into several thrifts, but not about any contacts with the five senators.

Bush, acknowledging that concerns about the relationship between Lincoln and its regulators has reached the White House, has said he intends to respond ″fairly soon″ to a written request by Gonzalez three weeks ago to replace Wall.

″I’m not closing the door on it; I just don’t know at this juncture,″ Bush said. ″But when the question is put: If part of the savings and loan problem proves to be me management or regulation people that aren’t aggressive enough, would you make changes?, the answer is yes.″

Wall, a former banking aide to Sen. Jake Garn, R-Utah, on Monday interpreted Bush’s remark as only an indication that he wants to hear both sides before making any judgment.

He said no one at the White House has talked with him about the House banking or Senate ethics committee probes and repeated his complaint that, after four weeks of hearings, he has still not testified.

Wall’s tentatively scheduled appearances before the committee have been postponed twice by Gonzalez. He is now scheduled to testify on Nov. 21, the same day that Keating has been subpoenaed to appear.

″The president is a lawyer by training, and clearly he know that one is innocent until proven guilty,″ Wall said. ″And certainly one has to have an opportunity to respond to the questions that are raised.″

In fact, Bush is not a lawyer.

Gonzalez, meanwhile, said Monday he hopes Bush ″really considers removing″ Wall. ″It’s a shame that Wall didn’t remove himself on his own initiative,″ he added.

Answering reporters’ questions, Wall said Cranston, called him in August or September of 1987 asking why a year-long examination of Lincoln by Bank Board regulators in San Franciso had not been completed. Keating interests gave Cranston or projects in which he was interested $974,000.

Wall said he also received a phone call from Cranston and two from DeConcini earlier this year urging prompt Bank Board consideration of three different offers by private investors to buy the troubled thrift before it was seized by the government in April.

None of the offers was acceptable to the bank board, Wall said. But he added that he considered all of the calls from the senators ″appropriate.″

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